- Bank of England deputy governor Jon Cunliffe said that it is “probable” the UK central bank will launch a digital currency.
- Cunliffe listed several factors that served as a catalyst for a CBDC, but specifically highlighted the pandemic.
- He clarified that the UK will continue to make physical cash available.
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Bank of England deputy governor Jon Cunliffe said that it is “probable” the United Kingdom will launch a central bank digital currency, clarifying that no decision has been made on when to introduce it as of yet.
“Introduction of a CBDC would be a very major public project which would have material implications for the financial sector, many parts of the economy and for society more broadly,” Cunliffe said in a speech to the Official Monetary and Financial Institutions Forum, a think tank, Thursday.
“But it looks probable in the UK that if we want to retain public money capable of general use and available to citizens, the state will need to issue public digital money that can meet the needs of modern day life,” Cunliffe added.
The statement is a development from an April comment by British finance minister Rishi Sunak, who, at the time, said the state is merely “exploring” a CBDC he nicknamed “Britcoin.”
CBDCs are digital currencies backed by their respective countries and secured on a blockchain ledger.
Cunliffe clarified that the central bank will continue to make physical cash available as long as there is demand for it, especially for the 1.2 million unbanked people in the UK, who rely on cash and cannot access digital payments.
“I do not think that demand for cash will entirely disappear any time soon,” he said. “But cash, and by extension public money, is becoming an ever-smaller fraction of the money we use in the UK and increasingly unusable in a digital world.”
A number of central banks have been exploring CBDCs spurred by strong momentum in the cryptocurrency space this year.
China has been leading the race since developing its digital currency electronic payment CBDC in 2014 and testing a pilot in 2020. Norway, the world’s most cashless country, also announced in April it will start testing various solutions for a CBDC.
In the US, Boston Federal Reserve Bank President Eric Rosengren this week said that the Fed’s CBDC research is still ongoing as it continues to weigh the implications of launching digital money in the US.
Cunliffe touched on the possible threats of a CBDC as well, in particular, its security risks. He likened the current payment infrastructure to a “Blackberry” and is eager to develop it into an “iPhone.”